Removing a fret
Instruments- discuss specific features, luthiers, instrument problems & questions
Marg, I don't know how to remove a fret, so I can't help you there. However, the lack of knowledge has never discouraged me from speaking up!
My advice is to be patient and not rush into altering your dulcimer in this way.
As others have explained, it would be easy to harm your freboard when removing a fret, and you certainly don't want to do that.
Skip might be right that if you keep playing and consciously think about the small space available for the 9th fret, your technique will improve and this problem may cease to exist.
And if you keep playing for a while, you might find uses for the 8-1/2 fret as you get more used to it.
For the three reasons above, I suggest waiting a while before making a final decision to remove a fret. You can always do it later, but in 6 months or so you might find it unnecessary or even undesireable.
You might also use this as an excuse to get another dulcimer!